Simon Property Group and Donors and Mel Simon and Philanthropy and Real Estate & Retail

Simon built mall empire from scratch, changed way America shops

September 19, 2009
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Melvin Simon could see a revolution was brewing in retail in the mid-1950s.

A brand-new interstate system had green-lighted the rise of far-flung suburbs and drive-everywhere car culture, and developers across the nation had begun building the first enclosed shopping centers.

Simon, then in his mid-20s and freshly discharged from an Army posting at Fort Benjamin Harrison, was ready to make his move.

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Simon, who died at 82 on Sept. 16, would do just that and along the way change how America shops. He was chairman emeritus of Simon Property Group Inc., co-owner of the Indiana Pacers basketball franchise, and one of the city’s most prolific philanthropists.

When Simon left the Army, he was confident and eager and had nothing to lose. The son of a New York City tailor had earned a bachelor’s degree in accounting and an MBA from City College in New York and was eager to put it to good use.

For a time, he sold encyclopedias and cookware before landing a job as a leasing agent for Albert Frankel Co., with help from Irv Katz, founding partner of locally based accounting firm Katz Sapper & Miller.

Simon had lived across the street from Katz’s mother in New York, so shortly after he arrived in Indianapolis, he introduced himself and struck up a friendship with Katz that would last more than 50 years.

Katz, 90, said Simon was outgoing, confident and, above all, a man of his word.

One of Simon’s first assignments was as a leasing agent for a collection of department stores, retail shops and parking spaces known as Meadows Shopping Center, the first of its kind in Indianapolis, which opened in 1957 along 38th Street near Keystone Avenue.

Two of Simon’s early clients were Phil and Eve Perlstein, who owned a fabric shop in the center. He made enough of an impression on Phil Perlstein that in the late 1950s he told his 6-year-old son Mark that he expected Mel Simon would be very successful in his time.

Years later, Mark Perlstein would sit across the table from Mel and negotiate deals. Perlstein, now a principal in Sitehawk Retail Real Estate, described Simon as “shrewd and likable” but also a man in the right place at the right time to capitalize on a seismic shift in retailing.

“Back then, you could do deals on a napkin and a handshake and it was done,” Perlstein said. “Today, it’s a little different.”

Today, Simon Property Group Inc. is the nation’s largest owner of retail real estate, a coast-to-coast empire with interests in more than 320 retail properties in the United States and more than 60 overseas.

But when Mel Simon formed Melvin Simon & Associates in 1960 with his brothers Fred and Herb, it was a small, freewheeling outfit developing strip centers. By 1964, they decided to focus on enclosed malls, then a somewhat novel and unproven concept.

“It took a great deal of vision and courage, because this was a very new concept,” said Dan Smith, dean of the Kelley School of Business at Indiana University. “People had to change their shopping practices; if they had not changed, this would have gone down very fast.”

The company grew fast, opening a couple of malls per year in the 1970s and 1980s.

Simon had tremendous vision, even in the early days when money was tight; he would see a property and decide on the spot it was perfect for a mall, said Sidney D. Eskenazi, the first attorney for Melvin Simon & Associates and now CEO of locally based Sandor Development Co.

Simon developed close relationships with executives at national retailers such as Sears and J.C. Penney and called on them before he moved forward on a particular location. His negotiating stance with retailers went something like this: “No means maybe, and maybe means yes,” said Herman Renfro, a former Simon executive who now owns a private development firm.

Even after Simon grew into a giant corporation and went public in 1995, a handshake deal with Melvin was better than a signed deal with anyone else, Renfro said.

“Even if you agreed to something verbally but did not put it in the deal, he would make you honor it,” Renfro said. “Everyone who did business with Mel Simon remembered him.”

Simon was a unique character, often joking around with colleagues and customers. At times, he was unpredictable and brash. It is rumored that he built the golf course at his Carmel estate only after he was kicked out of a local golf club for using salty language. He was known to summon employees with a yell instead of a phone call.

Once, while in a meeting with executives of another company proposing a partnership, he tore their proposal into tiny pieces and threw it around the room, Renfro said. Then they explained the deal in a way that piqued his interest. “So he goes around trying to pick up pieces of the contract and put it back together,” said Renfro, who worked with Mel for 17 years.

Armed with business successes, Simon pitched in to help revitalize downtown as a buyer of the financially strapped Indiana Pacers in the mid-1980s and as a champion of Circle Centre mall in the mid-1990s.

He worked tirelessly to help re-create the vibrant downtown his own industry had helped to diminish years earlier. At a time when many downtown mall projects were failing, Simon was determined to pull off Circle Centre, Katz said.

“He wanted to do what other people couldn’t do,” Katz said. “If somebody told him he couldn’t do it, he would like to prove he could.”

Even as Melvin Simon’s health began to fail in recent years, he kept in touch with the real estate business. He made the rounds on a scooter at the 2008 International Council of Shopping Centers convention in Las Vegas, cracking jokes and catching up with old friends.

Simon and his wife, Bren, also kept in touch with Hollywood friends he made during a mostly unsuccessful (with the exception of “Porky’s”) foray into moviemaking in the 1980s, and with prominent Democratic leaders such as former President Bill Clinton.

But he kept a sense of perspective, and humor, chatting with all comers.

“He treated everyone with respect, whether billionaire or bellcap,” Indianapolis Colts owner Jim Irsay said.

Simon lately had focused on philanthropic endeavors, including gifts of $10 million to the Indianapolis Museum of Art and $50 million for the IU Simon Cancer Center, including an endowment in honor of his late son Joshua Max Simon.

“Mel Simon was the American dream come true,” said Michael Papo, executive director of the Jewish Federation of Greater Indianapolis. “[He started] off with modest economic circumstances and built a very successful business, providing jobs for thousands if not tens of thousands of individuals, and through that process he was able to give back and share and make a whole community a better, safer, more loving place.”•

 

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